Will Bitcoin Fever Push 2018 Price to $20,000? $100,000?

“Most advisors today are steering their clients away from such high-risk investments. This is the safe and conservative approach. However, there can be a huge downside of doing this, too, as many investors don’t want to feel like they missed out on the next big thing. I’ve already run into investors lamenting the fact that they missed out on investing in Bitcoin.”

Yet, many academics urge extreme caution. When asked about the price of Bitcoin next year, Christian Catalini, a professor at MIT, told ThinkAdvisor, “It is difficult to predict.”

“As institutional investors come in and start investing in this space, the market may stabilize, but right now there is clearly a lot of volatility, enthusiasm and uncertainty,” he said.

Panos Mourdoukoutas, an economics professor at Long Island University, when asked about Bitcoin pricing, responded that “it’s certainly a bubble, but it will continue blowing bigger before it pops.… They are extremely risky investments, driven by hype.”

Also, Joshua Gans, a professor at the University of Toronto, said Bitcoin prices “can be subject to wild volatility. But that said, I couldn’t forecast where it will go next year.”

There are some other possible issues related to Bitcoin on the horizon. For instance, John Grable, a professor at the University of Georgia, points out that the Internal Revenue Service requires disclosures of the account numbers and transactions of any American who owns a Bitcoin. “The implication is clear: holding this asset is likely to prompt scrutiny by the IRS,” he said.

Also, Andrew T. Levin, an economics professor at Dartmouth College, raises the issue of central bank digital currencies.

He explained that “privately issued cryptocurrencies may be useful in facilitating certain types of payment transactions but cannot serve as an adequate substitute for legal tender. Indeed, this is the crux of the rationale for moving ahead expeditiously in the establishment of central bank digital currencies (CBDC). The Swedish central bank is currently at the frontier in developing a CBDC, and a number of other major central banks (including the BoE, BoC, and PBOC) are actively engaged in considering CBDC.”

As far as the U.S., Federal Reserve Vice Chair Randall Quarles recently gave remarks in which he indicated that the Fed is not actively considering the possibility of launching a CBDC, Levin said. Yet, Marvin Goodfriend was recently nominated to the Federal Reserve Board, and last year Goodfriend gave a speech “in which he noted that CBDC could be a crucial tool for monetary policy because it would allow the central bank to cut interest rates below zero in response to a severe adverse shock,” Levin said.

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